The Dodd-Frank Wall Street Reform and Consumer Protection Act (Wall Street Reform Act) was signed into law by President Obama on July 21, 2010. The new law contains a number of provisions that affect the workplace of employers in the financial services industry and other public companies. It enacts new whistleblower protections, regulates compensation for mortgage originators, provides new scrutiny of diversity in the workplace, and regulates executive compensation.
- Whistleblower Protections – The Wall Street Reform Act strengthens the whistleblower provisions contained in the Sarbanes-Oxley Act (SOX), and creates new whistleblower protections for employees who engage in certain whistleblowing activities to the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), or the newly established Consumer Financial Protection Bureau (Bureau).
- Compensation for Mortgage Originators – The Wall Street Reform Act amends Section 129B of the Truth in Lending Act to prohibit forms of compensation for mortgage originators that vary based on any rate or term of the loan (other than the loan amount).
- Diversity in the Workplace – The Wall Street Reform Act also provides for the creation of a new diversity “czar” for each of the major federal financial regulatory agencies, and directs each agency to create an Office of Minority and Women Inclusion (Office) that “shall be responsible for all matters of the agency relating to diversity in management, employment, and business activities.”
Among other things, the Office will be responsible for assessing the diversity policies and practices of every entity regulated by the major financial regulatory agencies and of contractors performing any kind of service for the agency. The Office is authorized to take action where it concludes that the contractor is not making a good-faith effort to comply with the diversity provisions of the Wall Street Reform Act.
- Executive Compensation and Corporate Governance – The Wall Street Reform Act also addresses executive compensation and corporate governance issues, such as recovery of erroneously awarded compensation (clawbacks); executive compensation disclosures (internal pay equity); disclosure of employee and director hedging; restrictions on voting by brokers; disclosure and justification where the chairman and CEO positions are held by one person; required shareholder voting on executive compensation disclosures (“say on pay”); enhanced reporting on compensation structures applicable to covered financial institutions; and mandated compensation committee independence.
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